Who pays for major building improvements under commercial lease?

Question

We operate in NJ where we are currently leasing a space for a store. We are in need of more power at the location which requires a major investment to be made into upgrading electrical infrastructure in the building. Our lease expires in less than a year and I think it's the landord's responsibility to cover the cost of such improvement since it's his property and it would be a permament improvement to his property from which next tenant would benefit if he or us don't renew the lease. Am I right in my thinking? Is there a law which I can use to pursuade him that it is his responsibility to pay for it?

Thank you.

Answer 1

That should be spelled out in your lease.

However, the landlord is under no legal obligation to provide upgrades because you need it. At most, he's responsible for regular upkeep of a standard building set-up - and many leases stipulate that the landlord isn't even responsible for any repairs or maintenance.

It may seem inherently wrong because a permanent improvement would stay with the landlord's building, but if you need something above standard electrical, he doesn't have to provide it or pay for it. Your best bet is to approach the landlord and work out some sort of deal, letting him know that you'll have to move if the electrical doesn't get upgraded.

Answer 2

Im not aware of any laws in NJ - as Im in CA.

I can tell you that this sounds like it is a tenant improvement - something that you need done to improve your work space. However, the tenant improvement will benefit the Owner as well. Often times, as this will benefit both parties, it would be best to share costs with the Owner. Afterall, if he puts forward the money and you do not sign for an extended lease, he is assout, so to speak.... Sure, he can get another tenant, but he could get another tenant WITHOUT these improvements.

Fact is, you leased the area as it was a year ago or longer. Therefore, it is not the Owners responsibility. (I know this isnt what you wanted to hear.) However, maybe try this- agree to resign/extend the lease for two years IF the Owner pays all costs, or, agree to pay a portion of the costs and stay an extra year. Or, go find a new location!

Good luck!

Answer 3

This is likely covered in your lease. A major building improvement is something that would impact all tenets in a building. The improvement you are talking about only impacts you. I can't see this being a landlord responsibility.

As your lease expires in less that a year, you can begin discussing this as part of a new lease. If he wants to keep you bad enough, you might be able to reach some kind of agreement.